New Delhi: Just as India grudgingly prepared itself to re-negotiate with Russia on its demand to more than double the original cost for aircraft carrier Admiral Gorshkov, Moscow has conveyed another shocker to New Delhi that the deal will cost another $700 million.

This makes the deal worth $2.9 billion, which is almost thrice the original amount agreed upon when the agreement was first reached on January 29, 2004 by the NDA Government for $974 million. While India did expect cost-escalation to the tune of $350-400 million in the course of refurbishing the old ship, Russia stunned India by proposing a $1.2 billion hike in November 2007 that pushed up the cost to $2.2 billion.

It took several rounds of official-level talks and then the visit by Defence Minister A K Antony to Moscow for the UPA government to consider Russia’s request. Finally, the Cabinet Committee on Security gave its approval in December, around the time Russian President Dmitry Medvedev was visiting India, to renegotiate the Gorshkov deal in view of the cost escalation.

However, India has now been informed that on February 10, Medvedev signed on a final deal amount of $2.9 billion after “thorough analysis” of the refurbishing and trial costs. This was conveyed by a Russian team that’s here for talks on the deal. It’s headed by Deputy Minister in-charge of Federal Service for Military-Technical Cooperation Alexander Fomin and includes Nikolai Kalistratov, Director General of Sevmarsh Shipyard where the Gorshkov is being refurbished.

The revised offer has surprised the Indian delegation stunned as it was expecting to find some “middle ground” to the earlier proposal made by Moscow. India has already paid $500 million as per terms of the initial contract. The Russian delegation has said that regardless of the outcome of this round of negotiations, Sevmarsh wants an immediate payment of $190 million for the work that’s underway.

While this wavering by Russia could set off a diplomatic row, Moscow is firm that it will meet the delivery deadline of 2012. The first of the series of trials, the Russian team has said, would start next year. However, the trials alone have been estimated at $500 million which could increase depending on prevalent Oil costs.

Sources said Russia wants to ensure it bears absolute no cost in the entire deal. Admiral Gorshkov, which has not sailed much while in active service after it caught fire, needs to be completely refurbished. While India is building its own indigenous aircraft carrier, the progress has been slow and the date of completion has now been pushed to 2014-15.

2004-’09: A 5-YEAR RUSSIAN DRAMA

Jan 2004: Original deal signed by NDA Government to purchase the carrier and complement of MiG 29 K fighters for $974 mn.

April 2007: Russia says cannot deliver on time, also need to increase price as shipbuilders underestimated amount of work required

Nov 2007: Russia says the Gorshkov will cost India another $1.2 bn

Feb 2008: A team headed by the Defence Secretary inspects the Gorshkov

-- Russia is seeking an additional USD 700 million from India for the repair and refit works it is carrying out in Sevmash Shipyard

-- Russian decision to seek USD 700 million dollars was conveyed to India on February 10 during the bilateral meeting to re-negotiate the Russian demand for additional payment for the 44,500-tonne warship

-- Sevmash Shipyard was also stressing on an immediate release of USD 190 million for continuing the repair work

-- USD 700 million demand was over and above the additional INR 1.2 billion the Russians were already demanding for the warship bought by India in 2004 for USD 974 million

MOSCOW: Russia could lease 'several' 'Shchuka-B' class nuclear attack submarines to India in coming years, a top official here said though the delivery of the first of the two nuke subs reportedly contracted by India is far behind schedule.

At the same time, the official had ruled out any plans by Moscow to strike similar deals with China.

"Yes, there is a real possibility of leasing for ten years several of our nuclear powered multi-role submarines of Project 971 of 'Shchuka-B' class," the Director of Federal Service for Military-Technical Cooperation (FSVTS) Mikhail Dmitriyev was quoted as saying by ITAR-TASS.

The Russian offer comes as Indian Navy has formulated a 20 year plan to produce indigenously 24 conventional submarines. New Delhi had also contracted for two nuclear submarines from Moscow, but navy has projected that in the next 10 years India would need to acquire or build another 10-12 nuclear subs.

These nuclear submarines would be similar to the 'Nerpa' class, which was involved in an accident in November during final sea trials in Sea of Japan.

"This possibility can materialise in the coming years," he added.

Dmitriyev also denied that Moscow was negotiating supply of nuclear submarines to China.

"The question of supply of our multi role nuclear submarines to China does not exist, as unlike India, China never asked for them. That's why we never negotiated with China on their lease or sale," Dmitriyev said.

"This issue was also not raised at the Russian-Chinese Intergovernmental Commission session on December 11 in Beijing," he said.

sir right now the russians are watching the progress of akula the nuclear sub which underwent the trajic accident,during sea trials , the indians have asked for an exytended trial after that if still india deems it unfit for use other nuclear subs could be offer but that is not earlier than late 2010,only then will the new subs be ready to undergo trials.
for now it seems everything is stagnant but the russians will be ready to offer anything now that india is interesred more in western systems.

sir right now the russians are watching the progress of akula the nuclear sub which underwent the trajic accident,during sea trials , the indians have asked for an exytended trial after that if still india deems it unfit for use other nuclear subs could be offer but that is not earlier than late 2010,only then will the new subs be ready to undergo trials.
for now it seems everything is stagnant but the russians will be ready to offer anything now that india is interesred more in western systems.

thnx

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My point is as the news item says two are on offer and more can be added it is well known fact that previously Russians had never acknowledged that Akula is offered to india it was under wraps. Similarly in the name of hiking Adm Gorshakov price there might be more under offer. Just my thought.

My point is as the news item says two are on offer and more can be added it is well known fact that previously Russians had never acknowledged that Akula is offered to india it was under wraps. Similarly in the name of hiking Adm Gorshakov price there might be more under offer. Just my thought.

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you might be right sir but exact details at this point of time is difficult to even guess,but aboutnot acknowledging akula before was to downplay the whole issue as the world especially our neighbours would raise a big hue and cry in the world forum.

you might be right sir but exact details at this point of time is difficult to even guess,but aboutnot acknowledging akula before was to downplay the whole issue as the world especially our neighbours would raise a big hue and cry in the world forum.

thnks

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Exactly my point so this time also could be the same reason show the cost as high priced carrier and then wrap up the deal. Well that's just a possibility

There's a total of US$2.5 billion still available from the final account settling of the Ruppee-Rouble trading arrangement from the days of the erstwhile USSR. Therefore, rather than pay the money to India in cash, the Ruskies in the mid-1990s suggested that they would like to pay back in kind. India said yes and this is how two projects were born: to dry-lease two Akula-2 SSGNs and to acquire the refurbished aircraft carrier Admiral Gorshkov and its complement of on-board aircraft. Now that India wants to dry-lease only 1 Akula 2 (instead of two) the Ruskies are in a bind as they need the cash and therefore the best way for them to get it is to suggest to India that the Ruppee-Rouble debt adjustment chapter be closed earlier and have consequently proposed that instead of the money pledged by India for the 2nd Akula-2 SSGN, that money now be spent on the aircraft carrier project. But mind you, when talking about the total amount for procuring the INS Vikramaditya, one should deduct the amount that goes for procuring the MiG-29K/KUBs, Ka-31s and Ka-28PLs under a separate package. Consequently, the cost of procuring the aircraft carrier comes to about US$2.1 billion, which is what any other foreign shipyard like Fincantieri or Navantia would charge. But having said that, non-Russian shipyards would have delivered such an aircraft carrier within four years of contract signature, unlike the Ruskies.

Talks to salvage a contract for the supply of India's aircraft carrier «Vikramaditya» (former «Admiral Gorshkov») are close to completion

According to «Vedomosti» source in the United Shipbuilding Corporation (USC), a solution to the problem of additional payments for finalizing the aircraft carrier «Vikramaditya» possible in May, for which the Indian side should hold a few more rounds of price negotiations. According to him, this amount is $ 1 billion. While the Indian media reported last year on a figure of $ 2 billion, which asked the Russian side, a senior official of one of the national authorities involved in the negotiations with India, said that this amount is considerably less. . In the embassy of India to comment on talks with Russia did not. At the end of last year, the Government of India agreed that the ship needed for finalizing the additional costs, and authorized to conduct negotiations on this issue with Russia.

The contract for a radical modernization «Gorshkova» for Indian Navy was back in 2004, and then work with the ship was estimated at $ 650 million from the aircraft carrier for customer delivery in 2008. However, in the works at Severodvinsk «Sevmashpredpriyatii» revealed that the amount of work much more and require additional funding and delivery of the ship was moved.

For two years now, India does not finance these activities, but they are ongoing - the readiness of the ship is now more than 50%, said the representative of «Sevmashpredpriyatiya» Michael Novozhilov. Comment amount required payments under the contract for the company refused.

The sum of $ 1 billion looks much more realistic than the amount of $ 2 billion, said an expert Center for Analysis of Strategies and Technologies, Konstantin Makiyenko. This is the most difficult from a technical point of view the contract in the history of military-technical cooperation between Russia and India and both sides are interested in having to complete the project successfully, he says, so the chance of compromise on the price in a short time is very high. If the negotiations take, then the state has plans to further support the strategically important «Sevmashpredpriyatiya» (this is the only current manufacturer of nuclear submarines in Russia). According to a source at USC, last year for the continuation of work on «Gorshkova» Plant received credit Vnesheconombank of 6 billion rubles. And this year working on the idea doinvestirovaniya in capital 12 billion rubles. budgetary funds.

The following russian link says that India will only be asked to pay 1 billion USD. Cost estimates were reduced by $1 billion.

Perhaps INvInCiBlE can provide a rough translation.

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the above post by singhji is a word by word translation of the original russian news, in the link.
i already spoke with singhji regarding the credibility of this news,vedemosti is a very credible source.

from this news it seems that something more than what we are seeing and hearing is going on between the 2 parties involved, my guess would be as good as yours.

a new carrier would not cost less than 5 billion that too not in the same class but quite small, this deal also included the akula nuclear sub linked with it so its not the carrier alone its a mega package thats why india couldnt refuse.

akula's are also on hold, russians haven't delivered anything yet, this whole deal took a turn for the worst and kept getting worst. This carrier also has high maintenance costs too and our navy spent a lot of time training for the akulas and then having to wait and possibly retrain?

a new carrier would not cost less than 5 billion that too not in the same class but quite small, this deal also included the akula nuclear sub linked with it so its not the carrier alone its a mega package thats why india couldnt refuse.

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Actually NO!
I am bit involved in this, so let me just say Just like Yelsten asked HD Deve Gowda to help out Sukhoi(which worked out very well for us), he also asked to help Sevmash! You have no clue about who much a new carrier will cost along with its fittings, American CVN 76, cost only 5 billion fully fitted out!
And the Gorshkov is not a Nimitz. As much as I love the Russians, Indians have helped out the Russians in the past 2 decades more than anybody else!